June 4, 2009

Bank of Canada frets over dollar’s value

The Bank of Canada said Thursday it was maintaining its .05 percent interest rate and expressed concern with the Canadian dollar's increased value.

The bank last set its rate on April 21, and the Canadian dollar has risen 12 percent against the U.S. dollar since. A release from the bank said that rise could hamper recovery from the recession.

In recent weeks, financial conditions and commodity prices have improved significantly, and consumer and business confidence have recovered modestly, the release said. If the unprecedented rapid rise in the Canadian dollar (which reflects a combination of higher commodity prices and generalized weakness in the U.S. currency) proves persistent, it could fully offset these positive factors.

The bank said unless inflation spirals, the overnight rate can be expected to remain at its current level until the end of the second quarter of 2010.